Nelson 67, DOB: 3/15/1946, and Brenda (use student’s last name), 59, DOB: 4/12/1959 are married and have a daughter, Laura, 18 years old, DOB: 12/15/1995, who can be claimed as a dependent on the income tax return. This year Laura received a form 1099 from Haven Savings Bank indicating that she received interest income amounting to $1,300. Nelson is a Manager for IBM and his salary (Per W-2 form) this year was $57,000. Brenda works for Macys and her salary amounted to $25,000.
Nelson provides 100% support of his mother, Irene, age 89, DOB: 4/14/1924, who lives in an apartment of her own. The mother's only income was interest from Dime Savings Bank totaling $3,900.
Nelson retired from IBM in June 30, 2013, the current tax year. He is to receive an annuity amounting to $40,000 per year. In Year 2013 he received $20,000 from his annuity. His contributions or investment in the contract were $300,000. The annuity tables show that Nelson has a life expectancy of 10 years from the annuity starting date. The General Rule is to be used.
Nelson received an ordinary dividend (non-qualifying) amounting to $800 this year from his stock ownership in Intel Corporation. Also interest income from Municipal Bonds issued by the City of N.Y. was received amounting to $2,400.
In addition, Nelson received a $1,700 cash award for length of service. He has been with IBM for 35 years.
Nelson received $3,000 of social security benefits since June 30.
Brenda purchased a couch which retails for $5,000 but its Cost to Macys is only $1,200. She received a 80% discount off the retail price.
Brenda's boss gave her a $975 cash gift at Xmas time.
In addition, Brenda received life insurance proceeds from her mother's death amounting to $100,000 but elected to receive the amount in 5 equal installments of $26,000, starting January 1, 2013, the current tax year.
Other: Nelson & Brenda Green Social Security
Info.: 525 Lexington Avenue, N.Y. N.Y. Numbers
Withholding: Nelson = $14,000 111-11-1111
Brenda = 9,000 222-22-2222
Laura = 0 333-33-3333
Irene . = 0 444-44-4444
PREPARE THE FEDERAL INCOME TAX RETURNS NECESSARY FOR NELSON, BRENDA, LAURA AND IRENE. Each item of income not identified
